How to Trade Gold for Money

How to Trade Gold for Money

9 min read

Do you know how to trade gold for money? Gold is precious commodity money. People hold on to it for many reasons. However, one of the main reasons they hold it is to sell it and use it to generate more income or money in the present or future. This is commonly done through investments. It’s a great safe haven for uncertainty. Our currency used to be gold backed. It wasn’t until we moved away from that with the dollar that we had issues with our country’s finances.

You can trade gold to make money in many ways, and one way is through investments. When it comes to investments, buying financial instruments is a great idea, and it starts with stocks, commodities, assets, ETFs, and futures.

If you want to trade your gold for investment purposes, the best way to go about it is to sell it at market rate and bring the money home. Then, research which instruments to buy, open a trading account and start buying.

Have you ever wondered why some investors are obsessed with gold? After all, it’s not a rare metal, as we now know. It has its value, but it’s not due to scarcity.

Gold probably hasn’t moved the needle for you unless you like to collect and wear jewelry. But in market volatility, gold is one of the investment assets that typically maintains its value. So herein lies the true value of gold. 

Growth investors will call gold boring; to be fair, it is. But when stocks are crashing, and inflation is running wild, sometimes boring investments keep you afloat. There are plenty of different ways to invest in gold.

You might not think to look at gold, especially if you are into high-growth tech stocks or speculative cryptos. But, heck, I’m one of those investors too. So let’s dive deeper into why you might want some gold in your portfolio and how to gain exposure to it.

How to Trade Gold for Money by Buying Stocks

One way to trade gold for money is to buy stocks. So you can essentially sell gold to buy stocks that pay dividends or buy stocks and sell them later for higher gains/profits.

The best way to go about stocks is to research the most important stocks today and build a portfolio around them. Our tip is to ‘mix it up.’

You can do this by buying small-cap stocks, mid-cap stocks, and high-cap stocks. This will help you diversify your portfolio the most and help in increasing your profits and returns. To start investing in stocks, you must register an online trading account, deposit money, and start trading immediately.

However, make sure you know what you’re doing if you’re going to trade gold for money. For example, know how to fund support and resistance. Have a trading plan mapped out. And know how to read charts. Then you can safely trade precious metals.

Go For ETFs

Another way to trade gold for money is to buy ETFs. ETFs are exchange-traded funds. They are a type of investment fund and an exchange-traded product, which is well traded on the stock exchange.

ETFs are a better option than mutual funds. They offer low operating costs, greater transparency, and better tax efficiency.

Popular ETFs today are the SPY-SPDR S&P 500, VOO-Vanguard S&P 500 ETF, QQQ-PowerShares QQQ ETF, and others. ETFs offer bigger portfolios and offer great tax advantages.

They also offer the chance to make more money and are securer, profitable investments. You can buy/sell ETFs if you have an online broker account. ETFs are liquid and trade openly during market hours.

But Warren Buffett Hates Gold

Yes, he does. Buffett has been quoted as saying that gold has no use and, therefore, no intrinsic value. He says the same for Bitcoin and other cryptos as well.

Buffett comes from a time of investing where the utility to the consumer and the profits the company makes from the product are the true value of the investment. He loves companies like Coca-Cola and Apple, so you can see how he forms his investment thesis. 

But because Buffett doesn’t like gold, it doesn’t mean it’s a bad investment. He has made plenty of losing trades, so don’t just copy every move he makes. Buffett has his style of investing, and you should have yours.

When he says he doesn’t invest in gold, that’s fine, but he also has tens of billions of dollars to afford to make a few bad trades now and again. Unfortunately for us, we don’t all have that luxury. You’ll make money if you know how to trade gold for money.

Is Trading Gold Profitable?

When it comes to knowing how to trade gold for money, you want to be profitable. That’s why we stress knowing how to read markets. Investment firms and hedge funds use precious metals like gold and silver as safe havens in portfolios. When the market goes bearish, and it will, your portfolio has profits still coming in.

If you pay attention to the charts, you know that gold goes up when the market is moving down. Of course, that doesn’t mean it won’t also go up in a bull market. But more and more people turn their eyes to gold when things get shaky—making it a profitable investment.

First, the price of gold is rarely volatile. This is what makes it an ideal hedge against market volatility for equities. For example, in 2022, we saw a severe market correction for growth stocks, but even value stocks have dropped.

The S&P 500 and NASDAQ are both deep into the bear market territory. Gold? It’s trading at or near its all-time highs. This is the power of having a stabilizer like gold in your portfolio. 

Is it going to make you a millionaire in a few years? Unfortunately, not. The price of gold is at all-time highs from centuries of being traded.

This will not provide long-term capital growth in the same way that tech stocks will. But in a bear market, where stocks are tumbling, gold acts as a way to keep your portfolio above water. 

How Can I Invest in Gold?

Do you know how to trade gold for money? This answer will be different no matter who you ask. For most investors, ETFs are one of the best and easiest ways to hold a diversified portfolio.

It takes the stress of researching individual companies and stocks out of your hands. You do pay some management fees, but they are generally fairly low. In addition, gold ETFs are relatively stable, and most holding stocks will pay a decent dividend yield to add cash flow to your account.

Again, this depends on your personal risk tolerance and investment goals. But for 90% of investors who want a passive portfolio, gold ETFs will provide you with that stability and diversification. 

Gold Stocks

This is an obvious one about how to trade gold for money. You can invest in gold companies like gold miners, processors, and merchants. These stocks are tied to the price of spot gold and futures contracts.

So while they may be performing well now, if the price of gold suddenly tanks for some reason, the gold companies will too. This is because their business revenues and margins will depend on how expensive gold is.

The higher the price per ounce, the more the company makes for the same fixed costs and inputs. Here are some gold companies to consider for your portfolio:

Barrick Gold (NYSE: GOLD)

Franco Nevada Corp (NYSE: FNV)

Newmont Corporation (NYSE: NEM)

Royal Gold, Inc (NASDAQ: RGLD)

Hecla Mining Company (NYSE: HL)

Gold ETFs

Are you having trouble deciding on a single gold company to invest in? There are plenty of gold ETFs that you can add to your portfolio as well. ETFs are great because they expose you to a basket of gold companies.

They also have much lower management fees than mutual funds and can pay dividends. In addition, you can own gold ETFs full of gold stocks, futures contracts, and even gold bullion. Here are some gold ETFs to check out when learning how to trade gold for money!

SPDR Gold Shares (GLD)

iShares Gold Trust (IAU)

SPDR Gold Minishares Trust (GLDM)

VanEck Merk Gold Trust (OUNZ)

Goldman Sachs Physical Gold ETF (AAAU)

Proshares Ultra Gold (UGL)

Invesco DB Gold Fund (DGL)

Gold Futures Contracts

Buying and selling futures contracts is an often overlooked way to invest directly in gold. These are contracts for the future price of gold, usually one or two months ahead.

This is essentially a bet on which way the price of gold will go. It’s a fairly advanced trading strategy, so most investors will probably prefer to look at gold stocks and ETFs instead.

You can usually trade futures contracts on any online brokerage platform. But make sure you know how to trade gold for money before jumping in.

Physical Gold

You can hold physical gold still! There are a couple of different ways to do this. First, you can go out and buy physical gold from a gold brokerage and hold it at home or store it in a safety deposit box.

Whatever method you think is safer. Remember that gold is heavy, so storing bars or bullion at home is not ideal. Another way is through a bank. Most large banks have a precious metals division you can invest in.

They will hold the gold for you in their storage, and you can buy or sell your investment anytime. You can even use your gold holdings as leverage to take out a loan or line of credit. This is one of the safer options for investing in physical gold. 

How to Trade Gold for Money Bottom Line

Knowing how to trade gold for money will help with the precious metal and all trading in general. But do you have to hold gold in your portfolio? Of course, not. I’m not here to tell you what to invest in; rather, I want to show you that gold can be in any portfolio.

I used to scoff at the idea of holding gold. That is an attitude that comes from being in a prolonged bull market. However, now that the bear market is here and the recession seems to loom, people are looking for safe havens like gold to hold the value of their wealth. 

I don’t blame them! However, it’s an awful feeling to see your portfolio balance continue to fall with each passing session. 

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